M&A Financial & Tax Due Diligence Interview

We discussed what sellers of businesses should expect from financial and tax due diligence. Justin Thomas from Cohen & Company joined us to discuss the purpose of the exercise, how long it usually takes, treatment of non-business related expenditures, buyside and sellside quality of earnings, common tax issues that arise during M&A transactions, and advice for business owners preparing for financial and tax due diligence.

1:07 what does M&A financial and tax due diligence entail from a seller’s perspective?
2:23 what information is requested from a business owner during financial and tax due diligence?
4:30 what is the purpose of financial due diligence?
5:44 how long does M&A due diligence take?
6:34 who from the business is typically involved in financial and tax due diligence?
8:33 how are non-business related expenditures treated during financial due diligence?
10:50 what is a quality of earnings and why are they important?
12:33 when is a sell-side quality of earnings recommended?
16:50 how much does a sell-side quality of earnings cost?
17:25 does a business using less sophisticated financial reporting software cause issues during financial and tax due diligence?
18:30 what if a business owner doesn’t have the answers to financial due diligence questions?
21:11 what are common tax issues that could delay or prevent an M&A transaction from closing?
23:38 what is one thing business owners could do to prepare for M&A financial and tax due diligence?

Example Due Diligence List: https://www.mcmcapital.com/wp-content/uploads/2020/12/Example-Diligence-Data-Request-List.xlsx

MCM Capital Partners is a Cleveland, Ohio based lower middle market private equity firm focused on partnering with niche manufacturers and value added distributors. We aim to drive value and topline growth at our portfolio companies through deep industry experience, operational expertise and business development support.

www.mcmcapital.com

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